3.1. Factor 1—The Adaptive Approach
As noted above, experts P1, P7, P3 & P4 form a tight cluster close to the positive end of the horizontal axis in
Figure 2. Conversations with these experts appeared to centre on the future role of the gas network as the system transits to zero, the production of hydrogen from dedicated renewables, its role in decarbonising heat at the point of use, and smart grid application of efficient heat technologies. The main issues in which they were interested were the relationship of the gas system to the electricity system, energy efficiency, electrification of heat, and the safety of hydrogen.
P6 (Academic), P8 (Transmission) & P9 (Consultant) have progressively less loading on this axis with values of 0.818, 0.738, 0.658, and 0.573 respectively.
The following aspects emerge from experts’ discussion as they articulate the reasons for their prioritisation of the policy goals.
3.1.1. Resilience/Security of Supply
Independently from each other, experts’ opinions in the cluster converge on the view that, with increasing penetration of renewables, hydrogen delivered using the existing gas grid would contribute significantly to the resilience of the electricity system. P3 (Heat Technology Industry, both supply & demand side) asserted that 100% electrification of heat was seen as not cost-effective and would be less secure, and that the existing Gas grid could contribute to resilience of the system. P3 stated that switching of customers to hydrogen could be expedited through the installation of hydrogen-ready boilers in the majority of the old housing stock and observed that 80% of the [low pressure] gas grid had been converted from iron to medium density polyethylene, which is compatible with the transport of hydrogen.
While most of the experts with high loadings on Factor 1 prioritised Zero Carbon as a top priority, P4 (Policy) and P8 (Transmission) did not conform to this pattern. While acknowledging Zero Carbon as an important goal for motivating change, P4 asserted that the UK should put resilience and security of supply as a top priority. Similarly, P8 stated that their organisation was entrusted to ensure the system is dependable, reliable, and affordable, and gave resilience the first priority, with cost as second. As will be seen, the above is reflected by generally more cautious positions on the future evolution of the energy system.
3.1.2. Flexibility and Cost Are Related Issues
P1 (Heat Technology Industry) & P7 both ranked flexibility as −2 (last of the five goals). P1 asserted that cost and flexibility are related issues. P1 explained that ‘with a system where the gas grid and the use of hydrogen continue to play a role in energy transition, the development of brown or green gas would help to address the various thermal deficiencies of the UK building stock’, implying the cost of improving the thermal efficiency of the dwelling stock should be balanced against the cost of providing hydrogen. This idea was echoed by P3, who stated hydrogen would be a most effective way of providing heat in the UK, particularly for the oldest housing stock.
P7 (Distribution), also gave the lowest priority to flexibility. Explaining their choice of priorities from the customer’s perspective, P7 considered that customers might need to weigh up the up-front cost of investing in a heat pump versus the running cost. P7 also noted that increased electrification with a proliferation of individual heat pumps would inevitably be linked to the development of smart grids: smart grid management would increase flexibility. With the increased use of electric vehicles, P7 suggested decentralised storage could play an important role in flexibility. P7 thought that the market for big, centralised battery storages appeared to be in decline.
P4 (Policy) did not conceive flexibility as a priority on its own: ‘it is simply an enabler for resilience’. P4 explained this conception with the rationale that [increased] flexibility is a feature of the system that the UK is working towards. The more flexible the system, the lower would be the cost, for example, by allowing the accommodation of more renewables. Therefore, the driver for flexibility is to reduce cost, and not for its own sake. However, P4 contended that hydrogen was unlikely to be any cheaper than natural gas, alluding to a complex relationship between the development of hydrogen and the role of natural gas in the transition.
P8 (Transmission), stated that the first goal of their organisation was ‘to keep the lights on’, and that resilience was the number one priority of this organisation. ‘We want to operate the system using the best tools available, making sure that we are keeping the lights on but also keeping the bills as low as possible. […] So, to provide resilience at the cheapest possible cost.’ P8 saw flexibility as just another aspect of resilience. P8 further stressed that the role of their organisation is to ensure stability of the system by balancing supply and demand at all times. Practically, what flexibility does for their organisation is to ensure the balancing of generation and demand for electricity and to ensure that grid frequency, nominally 50 Hz, remained within the statutory range of 49.5–50.5 Hz by topping up power deficits from pumped hydro or other stores, or with standby generation. However, in the event of high renewable penetration, flexibility would increasingly be required to ensure a continuous supply of electricity when ‘the wind is not blowing and the sun is not shining’, and from all the analysis P8 had done so far, it appeared that hydrogen would provide the large-scale flexibility that is currently, mostly provided by gas-fired power stations.
P8 remarked that the role of the electricity transmission system (operated by the Transmission System Operator, National Grid TSO) is not just to connect most of the generation capacity to fifteen regional low-voltage distribution networks (132 kV and below), who in turn supply electricity to consumers: some large consumers are directly connected to the transmission system. Moreover, we may see ‘the evolution of the consumer from just passive receiver of energy to sort of more active […] participant in the system’. Area Flexibility is one of the key foci in their organisation’s vision for 2030. P8 spoke of a complex evolving situation and did not think that anybody had a complete picture. However, P8 thought that first movement would occur in the distribution system. P8’s organisation must consider the extent to which it can participate in, and take advantage of the emergent complex energy market with increasing distributed energy production.
3.1.3. Equity and Choice
In terms of how the future system might support equity or fairness to customers, the concept of customer choice was raised. P1 (Heat Technologies Industry) suggested if the system is cost-effective, it will simultaneously cover the equity issue. Since different people will place different relative value on maintaining a constant internal temperature in their home, P1 suggested providing choice for customers is more important. However, this was not a reference simply to heat pumps or district heat networks. Thus, the possible impact on energy affordability amongst poorer sections of the population due to the high overall system cost, e.g., resulting from the production cost of hydrogen, the cost of upgrading the electricity grid or the cost of providing new heat networks was not systematically explored.
P3 (Heat Technology Industry supply & demand side) echoed P1 in viewing equity as a derivative of the other objectives/goals of the system.
P4 (Policy) was concerned that equity or fairness could be misinterpreted solely as keeping system cost down for the fuel poor. From a policy perspective, the UK has a fuel poverty policy in which many initiatives (Green Homes Grant, Energy Company Obligation, Energy Efficiency for rented properties, and Winter Fuel payments, Cold weather payments, as well as Energy tariff cap) were available to address fuel poverty. Therefore, P4 considered system cost to be of higher priority than equity, in this context.
Equity was the lowest priority for P8, who considered that this was not an issue that a public company was able to deal with. However, and as with P1, individual choice emerged to be an issue for P8, when asked to imagine a world with 100% electrification of heat. P8 commented on the challenge that would be posed by a switch from gas boilers to electric heat-pumps in the UK. It would mean a huge social mobilisation effort, and persuading people to accept a high up-front cost of a heat pump that might not be suitable for certain housing conditions. In addition, P8 asserted that individual choice would be incompatible with district heating.
3.1.4. Impacts of Heat Technologies on System Architecture
In terms of their views on current technologies, P1 did not see gas, or electric heat pumps and heat networks as in competition with each other but rather as complementary within the evolving system [architecture]. P1 and P7 appear to hold different and contrasting visions, with the former stressing some form of technological integration rather than competition, and the latter focusing on pushing the take-up of individual heat pumps without mentioning the possible usage of heat pumps in heat networks. In other words, experts were not explicit in their discussion of how these technologies might be combined and configured to improve system resilience and flexibility, perhaps reflecting an overall lack of discussion or debate around the wider range of possible future system architectures and strategy for deployment of technologies. P3, who articulated a vision of a globalised heat technology market, was cautious about viewing the future of heat supply largely through electrification. P3 suggested that a 100% electrified system might not be cost-effective and could be less secure. Deploying hybrid forms of heat technologies-gas/electric heat pumps, oil/electric heat pumps, as well as hydrogen-ready gas boilers in the domestic market-would contribute to system resilience through the existing gas grid. We note here in passing that hybrid systems are not restricted to hybrid heat pumps in single dwelling; effectively all interconnected energy systems are hybrid systems.
P7 was cautious of the impacts that Feed-In-Tariffs and other subsidies for renewables might have on the development of local nodes of distributed energy generation. P7 suggested that with the introduction of blockchain and dynamic pricing for the management of the energy system, it could become increasingly flexible. However, this interviewee’s discussion did not go beyond a vision of smart grids and distributed generation supported by innovative software to balance energy flows. The need for an energy system architecture perspective was implied but never articulated.
3.1.5. Impacts of Storage on System Architecture
Historically, and with the exception of a small number of countries whose electricity systems have been dominated by conventional hydro, energy in most industrialised countries including the UK has been stored in the form of fossil fuels. P4 (Policy) suggested that the requirement to deploy many Terawatt-hours of novel forms of energy storage to replace decommissioned fossil systems [
34] would be a significant driver of the evolution of energy system architecture. However, unlike P1 (and P2 who was primarily positively loaded on the Transformative Approach), P4 considered heat networks likely to play only a limited role in the future system due to the non-interventionist tradition of UK energy policy, and the fact that UK culture favours individual choice over collective intervention.
However, from P8′s (Transmission) point of view, district heating is definitely one of the solutions for decarbonising heat, at the lowest cost. It is currently modelling the potential of heat networks for 4–5 million of the UK’s approximately 26 million homes. P8 cautioned that the advantages of heat networks should be balanced with the understanding that such networks are only a vector (i.e., a carrier) of heat; the choice of heat production technologies for heat networks, and the extent to which they interconnect gas and electricity systems will be crucial to the success of the decarbonisation process. P8 added, in the future, this would probably mean either electrolytic hydrogen or electricity. Ultimately (and either way), it would lead to an increase in electricity demand. Without directly referring to the concept of system architecture, P8 suggested that the shape of the system would depend on how and where in the system storage was deployed. P8 envisaged the deployment of multiple different kinds of storage (thermal or batteries), operating over different scales, from short-term to inter-seasonal. P8 gave the example: ‘You can envisage a world where you have more distributed storage, maybe with small scale cylinders […] If you transition into something like […] using hydrogen for heating across large swathes of the country you will definitely need to have some inter-seasonal storage.’
Another issue that touched upon system architecture thinking was the possibility of closer coupling of industrial and domestic sectors. P4 considered that one of the barriers to such sector coupling is the difficulty of foreseeing the future of the UK’s economic base; the industrial and commercial landscape, and therefore the scope for exchange of heat between these and the domestic sector could change significantly by 2050.
3.1.6. Impacts of System Requirements on Investment, Planning and Modelling
P3′s organisation has invested in hydrogen as part of a global strategy. An industrialist, P3 did not agree with a strongly interventionist approach, as it might distort the market. P1 & P3′s interests appeared to be closely aligned. Both experts independently expressed their expectation of government policy that could drive forward investment in the production of hydrogen. They cited positive movement on this front. Government has funded several projects trialling hydrogen production and surveying customer acceptance. These are running in parallel with projects amounting to £14.9 million to promote electrification of heat.
P8 described how changing requirements of the energy system are impacting another important area for their organisation—network investment planning. For example, in accordance with the evolving generation mix, electrification of heat and proliferation of electric vehicles had the potential for a significant impact on the architecture of the energy system.
P8 indicated the need to plan for system resilience by drawing attention to the recent, unexpected reduction of electricity demand due to the COVID19 lockdown. P8 suggested that this kind of response would not be so different from what would be needed to manage curtailment of supply in times of low wind and solar generation. Currently the process involves renegotiation of formal arrangements for disconnecting fossil-fired power stations with stakeholders and the government. P8 said that the pandemic crisis had exposed a lot of weaknesses in the system in terms of commercial arrangements and that [existing] contracts were not necessarily the most appropriate tools available to the organisation for managing the process. There were a lot of challenges to [navigate] around these contracts to secure the system.
In the context of investment and modelling, P4 had concerns over the emphasis on cost optimisation in energy system modelling to support decision-making. P4 suggested that optimisation models with non-zero discount rates tend to try to defer decisions ‘to as late as possible’, which is inappropriate in the context of infrastructure such as nuclear power stations. Capital intensive projects would need to be spread out overtime. Risk premiums for new infrastructure are a significant issue for investment. Moreover, constraints on deployment rates [which depend on the availability of appropriately trained people, and the time needed to train them] is an issue often missed in models. P4 continued, noting that ‘modellers tend to assume massive carbon costs to drive technology deployment, but it does not work. Real constraints, such as those around deployment, should be built into the model[s]. Most of the current models, e.g., ESME and UKTM and also DDM (dynamic dispatch model) do not explore the impact of gaps in energy generation that can arise over longer periods of time. They do not come up with anything like the sort of levels of storage that is required because it’s almost been assumed it’s there. We could get away with that in the 80% world, but you cannot deliver that at net zero’.
In passing, we note that this exchange exemplifies the sometimes Procrustean work-arounds that modellers use to address complex, real-world questions with their models. A response from modellers, when challenged directly, is that such high carbon prices are just a proxy for the overall level of the policy response, and they should not be understood to mean that carbon price would be the only or even the main policy lever. It is possible that modellers have not communicated this clearly. However, the potential for mis-interpretation that is likely to result from collapsing a broad spectrum of policy responses onto the single measure of carbon pricing is obvious, as is the need for explicit modelling of supply chain dynamics.
3.2. Factor 2—The Transformative Approach
Factor 2 covers the opinions of 5 experts from different sectors, P10 (NGO), P11 an industrialist with a significant role in domestic retrofit, P9 an energy consultant, P6 an academic, P2, and an international expert on District Heating networks.
The factor loadings of these experts are: 0.997, 0.922, 0.531, 0.344 and 0.239 respectively. P5 had negative loading on both dimensions (−0.497, −0.254). P5’s views or expectations of the system could be interpreted as largely independent of either approach, adaptive or transformative.
P11, P10, and P6 represent a view of the future system as transformative and dynamic. P6 & P9′s views appear to be closer to that of P1, P3 & P7 whose views were more weighted towards Factor 1, from which perspective system resilience has a higher priority. P11, an industrialist working on innovative approaches to retrofit, and P10, who works for an NGO, appear to lean towards an expectation that the future system would be more transformative/dynamic. P2, a heat networks expert, occupied a position between adaptive and transformative approaches, diametrically opposite that of P5 (Governance).
3.2.1. Resilience and Flexibility Are Dynamically Related
P11 (retrofit) represents the demand side of the energy system. P11′s focus is on highly innovative retrofit technology in conjunction with small-scale communal heating, in low rise housing. Faced with the ranking exercise, P11 described it as a ‘Hobson’s Choice’, i.e., no choice at all. P11 explained that the difficulty in prioritisation of these goals stems from the fact that Zero Carbon is the ultimate goal, which the other goals should subserve. These choices all involve trade-offs against the costs of the system. For example, P11 said, if ‘we opted for resilience, we would need to build in redundancy which is costly’. Choosing one over the other would not achieve the optimal balance across them. If we focus on grid resilience, heat pump performance is important to minimise the expenditure in improving infrastructure. Therefore, P11 suggested that we need a joined-up strategy that would recognise the limitations of [existing] system infrastructure on one hand and incentivise the take-up of heat pumps on the other.
Perceiving flexibility as a means to deliver resilience rather than as an end in itself, P6 also found prioritising these goals difficult. However, P6 ranked resilience (with cost) as significantly more important than the other goals (ranked +1), while other experts in this group gave this goal a much lower priority (0, 0, −1, −1). Appearing to justify the choice for themself, P6 remarked: ‘if what [flexibility] means is to deliver a cost-effective resilient energy system, there is no reason for fundamentally wanting the electricity system to be flexible’. P6 offered no specific opinion on how the system could be made more resilient but was intrigued by the possible role of gas, and particularly the gas transmission system, in the future. For P6, system flexibility is required over multiple timescales, each involving different choices of technology, ranging from the intra-day level, for which battery storage or demand-side management including ‘heat storage in [building] fabric’ can be used, through to seasonal storage. ‘Well, the only things we’ve got at the moment that store energy at [seasonal] scale are gas fields, LNG … salt cavern storage, we use a little bit at seasonal scale, but they’re not big stores so we actually rely on import capacity. What we flex to manage the variability in long term heat demand—we flex import capacity. It’s hard to imagine we would do anything else in future.’ It is easy to be wise after the event, but we note that in the 18 months following this interview, the price of natural gas on the mainland UK day-ahead market increased roughly three-fold, and the UK’s ability to import gas declined significantly.
P9 (Consultant) who took an unambiguously firm stand on the role that hydrogen could play in the future of heat, ranked resilience and flexibility as −1 and −2, suggesting that these goals could be taken care of by other players in the system without stating who these players were. Conversely, having had experience in the country which has arguably the most successful heat networks in the world, P2 (heat networks) asserted with absolute conviction that heat networks have a significant role to play in the flexibility of an energy system. P2 stated that the large number of dwellings connected to heat networks in their home country provided high flexibility, and that with future developments [including the integration of electric heat pumps and large heat stores], heat networks would be able to make a significant contribution to resilience.
P2 was the only expert who addressed the challenge of the concept of evolvability of an energy system in the face of changing needs and new technologies. P2 attested to the evolvability of heat networks, based on experience and knowledge of their role in energy policy in this interviewee’s home country over the past 40–50 years. P2 asserted that because of the aggregated nature and dominance of heat networks, as new heating technologies had come on stream ‘every 10 years for the past 40, 50 years’, making changes had been easy as there had been no need to deal with individual solutions. It would have been ‘very difficult, very expensive to do that on an individual basis’.
3.2.2. Costs
Although it was clear that the term ‘cost’ in most policy documents refers to ‘system cost’, individual experts attributed different and/or broader meanings to it. For example, P6 suggested that a key question driving system cost was how reliable we wanted our energy system to be. The desire to have a continuous supply of electricity is associated with specific consumers and places. P6 stated that outages would mean more to the City of London than to suburbs or rural England, implying that loss of power to the City might take down vital global institutions. ‘We need to work out how reliable we want our electricity system to be […] we are not even close to really understanding that debate at the moment.’
Based on the recent assessment work carried across many countries in Europe, P2 was decisive that an energy system that is dominated by heat networks would result in lower system costs for transitioning to zero. However, P2 stated that heat networks might not necessarily be the solution for the UK, since those in this interviewee’s home country are operated as non-profit entities under a different form of governance. The price of heat is based on the principles set by law, which require it to be set according to the overall cost for supplying heat. P2 explained that variations in production cost were primarily due to the differences in fuel or heat sources used. For examples, using waste-heat from thermal power plants, cement works, or readily available biomass. Therefore, prices differed from area to area. Prices are also affected by economies of scale, i.e., heat supplied by large-scale networks in P2’s home country is usually cheaper than by smaller networks. P2 remarked that heat networks in the UK are generally too small, and that the numbers of complaints from customers was high, compared with ‘3 or 4 handfuls/year’ in this interviewee’s home country. The average number of dwellings per heat network in P2′s home country is roughly two orders of magnitude larger than in the UK.
3.2.3. Equity
From a broader societal perspective, P6 challenged the premise upon which the concept of equity is based. P6 contested the argument that system choice should not be slightly preferential to the better off, as that would leave people behind. P6 stated that ‘in an unfair world where we accept that there are millionaires and billionaires, and some people have bigger houses than others, private capital is needed to accelerate the decarbonisation of the energy system. In other words, to choose technology based on equity does not reflect the world in which we operate: it would not only risk policy paralysis but might also risk taking some of the options off the table that are needed to accelerate overall system change.
From a real-world perspective, rather than dismissing the concept of ‘equity’, P11 offered thoughts on how we might provide for energy equity in the process of decarbonising the heating system. Experience with retrofitting vulnerable people’s houses had impressed upon P11 the importance of affordability and the reality of fuel poverty. P11 had witnessed people ‘who can pay very little [and who] mostly suffer from cold.’ Therefore, if gas heating is to be banned, then the alternatives must be affordable for the most vulnerable. P11 suggested that the option of hydrogen might be inequitable as its effect would be to push total costs up.
3.2.4. Impacts of Heat Technology on System Architecture
Commenting on whether the UK could improve the resilience of its energy system by installing more heat networks, P2 pointed out that the UK is very much dependent on gas, which is a resilient infrastructure. To maintain such a level of flexibility (because of the increasing penetration of renewables), having a water-based system for the ‘last mile … in between the gas field and the North Sea and individual consumers would be the best of both worlds.’ Interestingly, the Last Mile concept was also espoused by expert P1 who affiliated strongly with the adaptive approach.
While adamant that gas boilers should no longer be installed in new housing, P6 was unsure whether current heat pump technology could fully support decarbonisation. P6 asserted that an energy efficiency (fabric first) approach in housing construction could reduce the demand for heating. This would then enable electric heat pumps to play a major role in decarbonising heat.
P6 was unpersuaded by the case for decarbonising the local gas network. P6’s arguments in this area were partly about cost. However, P6 laid more emphasis on the risk that a decision to repurpose the gas grid would delay other action at local level. To bring about transformation, a decision to electrify heat would promote local innovation and action; a push ‘to get on and deliver the household solution’. It would also be necessary to ‘task the network companies with upgrading the electricity system as you need to [but] you do not have to do it all overnight because you can be a bit reactive as the network starts to get strained’.
P11, with experience of combining communal heating with heat pumps and deep retrofit of dwellings, offered a system view of the relationship between grid resilience, heat technologies, and the thermal efficiency of the housing stock. P11 suggested that to successfully decarbonise heat would require a joined-up strategy that recognised the limitations of the energy infrastructure on one hand, to minimise the expenditure on improving the infrastructure, and incentivised the take-up of heat pumps at a rate that the infrastructure itself would be able to cope with.
P6′s main expertise is in electric vehicle (EV) technology. P6 suggested that EV batteries would be key for improving system resilience and flexibility. For P6, increasing numbers of EVs would provide an ‘amazing storage asset’ for decarbonising the electricity supply system as more and more wind and solar are brought in.
3.2.5. Implications of System Requirements for Investment, Planning and Modelling
In contrast to experts whose opinions aligned with Factor 1, the Adaptive Approach, there was little discussion about investment or planning among experts whose aligned with the Transformative Approach. The academic, P6, was the only expert who raised the issue of implications of technological choices for planning and modelling. Similar to P4, P6 was critical of the reliance on energy system models for planning, especially cost optimisation models. ‘I am quite cynical about models, especially cost optimisation models. I am really drawn to a way of working with them which is more conversational, where we’ve got a bit more acceptance of what’s missing from the models, what they do and do not do at the moment? Is there anything that they can never do? What aspects of this problem are they missing?’ P6 was concerned that some of the recommendations from modelling ‘might have pointed in the wrong direction for all of the best reasons’. P6 suggested that modelling teams could have been more productive if they spoke directly with stakeholders about what was missing from their models.
3.3. Expert Stakeholders’ Expectations on Governance
P5 (Governance) viewed resilience and flexibility not as separate categories but as subsets of the overarching goal of decarbonisation—a position close to that of P11. P5’s position, loaded negatively on both factors, appears consistent with their professionally neutral position on the direction of technical evolution of the energy system.
P5 asserted that the duty of regulators is to maintain an appropriate perspective in the light of the principal-agent relationship implicit in their role in the governance of the energy system. P5 placed the highest priority on the customers that the system serves. Hence, the goal of equity was ranked highest (+2). For P5, system costs in the current discourse could be over-simplified. Being a welfare economist, P5 extended their discussion of equity to cost, stressing the importance of considering how system cost is socialised, i.e., how benefits and welfare costs are distributed across customers and society as a whole. P5 thought that consideration should also be given to the issue of intergenerational transfers, particularly in connection with decisions that are made today that might pass on expensive assets to future generations. This risk (which can never be avoided completely), should be mitigated through clear policy and transparent forms of regulation.
P5 viewed resilience and flexibility not as separate categories, but as subsets of the overarching goal of decarbonisation. Therefore, ranking these two goals below equity and cost did not mean that they were less important.
Looking towards the future, P5 thought that digitalisation would increase flexibility through improved demand side management. In a market economy, P5 suggested that the selection of heat technologies for the future is best left to the market rather than being placed in the hands of the government. Subsidies would just distort the market.
On the impacts of selection of technologies on system architecture and modelling, P5 was confident that current renewable technologies could be combined to produce good outcomes for customers. However, trade-offs would be needed if these technologies were to combine [effectively and appropriately?] in the system. P5 remarked that policy goals such as equity, resilience/security of supply and costs are constraints imposed on technologists/modellers. Costs for improving resilience and underpinning security of supply in the context of high penetration of renewables should also be quantified, and resources depletion rates should be included to give higher relative value to the benefits of renewable energy. Detailed discussion about metrics for these constraints and the associated costs for implementing and integrating renewable technologies should be part of the discourse.